Primark Stores Ltd

Background

Primark Stores Ltd, commonly known simply as Primark, is a subsidiary of Associated British Foods (ABF), a diversified international food, ingredients and retail group which advertises global sales of £8.2bn with 96,000 employees located throughout 44 countries worldwide.

On its website, Primark describes itself as 'a retail group in the value sector and operates a total of 187 stores in Ireland (where it trades under the Penneys brand),Holland , Spain and the UK'. Primark state that they employ in excess of 27,500 people and that in the UK, Market researchers TNS have ranked them as the second largest clothing retailer by volume in respect to market share, whilst Verdict Research is reported to have placed Primark as the leading retailer in value clothing. In addition is it claimed that Primark was voted 'Best Value High Street Fashion' by GMTV and ITV viewers.

According to the Times, Primark's managing director and Chairman Arthur Ryan’s emphasis 'has been on trading lots of stock and being the cheapest on the high street as part of a drive to build market share'. A former employee is described as saying that “He would look at a product line that was selling well at £5 and cut the price to £3 because it would sell even more.”

The company still sells clothes at unbelievably low prices. According to the Times, it sources mainly from Asia, where it deals direct with manufacturers. It is claimed that it maintains its extraordinary cheap prices by ordering in huge volumes.

Primark is descibed as priding itself on 'being the cheapest place for clothes on the high street - beating even giant Tesco. “£1 in Primark, would be £1.10 in Tesco and maybe £1.60 in Marks & Spencer,” said one retail analyst'

Biographical Information

History

Primark was set up in Ireland by ABF in 1969, when it began trading as Penneys, it later took off in Britain in the late 1990's. Chairman and managing director Ryan is described as having persuaded ABF that one of the biggest growth areas in retail would be value fashion for young people.

Primark is described as having purchased 'a huge portfolio of Littlewoods stores in July 2005'.

Cheap Clothing: if you're not paying for it, then who is?

As Wyllie of The Scotsman points out, the 'next time you ogle a £4 peasant skirt... ask yourself this: if you're not paying for it, then who is?'

Primark was named as the least ethical place to buy clothes in Britain by Ethical Consumer magazine in 2005 and they scored just 2.5 out of 20 points on the ethical index that ranks the leading clothing chains on criteria such as workers' rights and whether they do business with oppressive regimes.

Campaining group War on Want have described manufacturers and retailers of cheap clothing as "chasing poverty round the world", with the aim of sourcing labour as cheaply as possible in one of the 160 exporting countries which furiously compete to export garments to the richest nations. In these countries, workers are reported as being paid as little as 5 pence an hour, which highlights how cheap clothing can begin to look relatively expensive.

"Companies like Tesco, Primark and Asda have squeezed their suppliers to the limit, forcing them to push down prices," says Simon McRae of War on Want. "Quite simply it can go no further without suppliers virtually working for free."

Ethical Traiding?

When entering Primark's website, a large 'Ethical Traiding' link pops up in the middle of the screen which leads to their 'Code of Conduct' . Within this code, Primark states that:

• Freedom of association and the right to collective bargaining are respected
• Working conditions are safe and hygienic
• Living wages are paid
• Working hours are not excessive
• No harsh or inhumane treatment is allowed
• Child labour shall not be used
• No discrimination is practised
• Employment is freely chosen

Primark: the least ethical place to buy clothes in the UK

Primark's code of conduct is what is stated as the 'base code' for the Ethical Trading Initiative (ETI) which Primark is a member . The ETI describes how it aims to develop good practice and provide a generic standard for company performance. Yet Primark has been deemed the UK's least ethical place to buy clothes which is a glaring contradiction. People and Planet may be shedding some light onto this when they state that a 'company’s membership of the ETI is no guarantee that conditions for its workers are acceptable. Retailers do not have to meet minimum standards to be members - they just have to commit to working towards these standards'.

In 2006, The Institute of Development Studies published the results of a study it had undertaken into the ETI. It is reported that the ETI 'has had little impact' and has 'failed to stop the exploitation of workers who produce the bulk of the products sold in UK shops'. Verkaik of The Independent describes how the report 'shows that while some working conditions have improved, in most cases the agreement has made little or no difference'. Workers continue to 'remain on low incomes, have no union representation and in some cases are harshly treated by their bosses'.

Breaches to the code

In 2006, The BBC reported findings that found textile workers in Bangladesh were being paid as little as five pence an hour to make cheap clothes for Tesco, Asda and Primark with starting wages at the factory being as little as £8 a month. The report continues that this is barely one third of the living wage in Bangladesh and it is mainly women who regularly work 80 hours a week in factories described by War on Want as "potential death trap[s]". Better-paid sewing machine operators are reported to earn £16 per month, however the report states that 'some workers spent up to 96 hours per week in the factories without even a day a week off.' Tesco, Asda and Primark are all reported to strongly deny the allegations.

A Guardian report in 2007 accused Primark, Asda and Tesco of breaching international labour standards in Bangladesh, when they uncovered 'a catalogue of allegations of Dickensian pay and conditions in factories owned by exporters who supply clothes to the UK'. The report states that garment workers for factories owned by exporters who supply to Primark, told the Guardian they were paid as little as £1.13 for a nine-hour day. According to the factory workers and Indian unions, this fails to meet their basic needs and therefore falls short of the minimum international labour standards promised by the Ethical Trading Initiative (ETI). The report also states that the workers were regularly forced to work overtime of between six and 18 hours per week which again breaches the ETI code which states that 'workers shall not regularly be required to work more than 48 hours per week, that overtime should be voluntary and that it should not exceed 12 hours per week.'

Another Guardian report in 2007 described how employees of factories making clothes for Asda, Tesco and Primark 'said their wages were so low that, despite working up to 84-hour weeks, they struggled to provide for their families. There were also reports of physical and verbal abuse by supervisors and of workers being sacked for taking sick leave'. A sewing machine operator who was making jeans for Primark is reported to have told the Guardian that she 'felt "threatened and frightened" after witnessing a colleague being slapped by a supervisor for not meeting her target'. Another worker at a separate factory making items for Primark is described as saying that 'he had been sacked and his wages withheld for taking two days off to take his baby daughter to hospital'.

Claims that workers were forced to work 12-hour days and sometimes all night to finish an orders were common as were reports that workers were 'refused access to trade unions and claimed that, in the last month, four colleagues had been dismissed for trying to organise a union'.

In an article describing issues surrounding companies such as Primark, Asda and Tesco, Wyllie reports that 'Low-cost retailers have even been accused of actively discouraging trade unions. Only a small percentage of garment workers are unionised and the suppression of trade unions and persecution or dismissal of workers who try to organise is common. Production is increasingly taking place in countries like China, where freedom of association is illegal'. Primark do not state the country of origin on their labels, the reasons they state for this is that it not a legislative requirement, that their customers have not requested it and that they often buy similar designs from several countries

Brushing off accusations of exploitation

As War on Want highlights, voluntary ethical initiatives allow companies such as primark 'to brush off accusations of exploitation'. In the report in The Scotsman, War on Want's Simon McRae is quoted as saying:

"Having an ethical code for these companies is such a contradiction. They may be signing up to ethical labour codes, but in pushing prices down and keeping them down they are actively hindering ethical practices. They can't keep pushing and pushing suppliers for cheap clothes and at the same time push for workers' rights."

Voluntary codes are no substitute for mandatory ones. Mandatory codes are enforceable, voluntary ones are not. As Hertz has argued, voluntary measures are in effect quite meaningless as companies can always walk away from voluntary codes. They are unenforceable and if there are breaches, there can be little or no recourse. As with the ETI, all that is needed is a stated commitment to ethical codes, companies are only suspended from the scheme if they refuse such a commitment. But a commitment does not necessarily translate into action and outcomes: as is the experience of many of the workers described in this article. The ETI also has no power of inspection, they must simply take the word of their member companies and trust the reports that the companies submit about themselves as being an acurate reflection

Primark state that in order to enforce their code of conduct they undertake 'hundreds' of audits every year. Yet in a Scotsman article a Primark spokesperson is quoted as admitting that in some of Primark's factories, a year will pass without an audit: "We work on a rotating basis, so we won't audit every factory in a 12-month period". McRae from War on Want criticises companies for not doing enough to enforce their declared standards: "The whole system relies on audits. Workers can be questioned in front of their bosses; audits are often short and sometimes take place just once a year".

It has also been argued that signing up to voluntary codes for social responsibility is a tactic used by the business world to avoid binding regulations and constraints on corporate power. In other words, so that companies can be seen to be acting responsibly whilst behind the scenes they continue with business as usual. Such measures of corporate social responsibility have also been criticized as being little more than a PR exercise as companies are not driven by concern for people and communities, but by their own reputations. Businesses are commercial entities acting in the pursuit of profit. Currently law states that actions must be in the best interests of their shareholders, in other words to maximise their returns. Their primary interests must be 'shareholder value and profit projections, not justice, equity or morality'. Initiatives such as membership of the ETI works to improve their bottom line as 'cause related marketing enhances corporate image, builds brands, generated PR and increases sales', which has been descibed as 'hypocritical window dressing'.

Business as usual?

According to the Ethical Consumer magazine, there is a general trend where 'fashion retailers seemed to be locked into a "race to the bottom" by selling increasingly cheap clothes made in low-wage economies with scant regard for workers conditions'.

Quoting War on Want's campaigns and policy directorJohn Hilary, The Guardian reports that "Price wars between the three retailers Asda, Tesco and Primark have driven the price of high street clothing down to 50% of what everyone else is charging. You have this relentless pressure on suppliers to keep costs down and, faced with these incredibly powerful retailers, suppliers in Bangladesh and China have no room for manoeuvre. Even the ETI have agreed that the buying practices of the UK retailer sector are driving down wages and having a negative effect on working practices."

In contrast, Primark claim that 'its low prices were the result of good technology, efficient distribution, bulk buying and minimal advertising'. Primark also states that "We buy our clothing from pretty much the same range of suppliers and countries as everyone else on the high street. We do buy a lot of clothing from China and that's something we do and everybody else does as well."

But saying that we're just the same as everyone else doesn't make things better for the exploited workers of the world. Primark has been deemed the worst in terms of ethics, whilst also being reported as the 2nd largest company in Britains value-clothes market in 2006 when they held 15% of the market. Asda is reported as the largest (holding 17%), with Tesco coming 5th (with 11%) after Matalan and New Look. The report estimates that the UK's value-clothes market is worth in the region of £7.8bn.

The researchers involved in declaring Primark as the least ethical place to shop for clothes in Britain are also reported to have said that 'ethical standards were so low among the 27 high street clothing chains surveyed that none of them could be recommended to shoppers with a conscience'. But it doesn't have to be this way, In the words of war on Want's McRae:

"The funny thing is that the mark-up on these clothes is actually so substantial that retailers could afford to treat their workers fairly, absorbing the extra cost and still making a hefty profit, but it's just greed that prevents them from doing so".

In the words of Luman Group chairman Mohammed Lutfor Rahman, who owns a factory in Bangladesh, "Buyers who come to Bangladesh tell us, 'we are businessmen, we want to make money. If we see cheaper prices in China we will go there'." He then added: "I would be the happiest man in the world if I could provide my workers with good money, air conditioning, health benefits. They are like children to me. But if I cannot cover the costs of running a factory, it will close."

If voluntary measures are not making the difference, then mandatory regulations must surely be the answer, as John Hilary from War on Want has argued: "Exploitation of workers in developing countries such as India is standard practice for British retailers right across the spectrum. This just underlines the urgent need for Gordon Brown to step in now and stop these abuses once and for all."

As consumers we can also become more aware, as stated by a spokeswoman for Ethical Consumer:

"If people shop in Primark because the prices are low then they must be aware that they are low for a reason," ... "And they must start asking questions: 'Where is this made? How do I know that this was made under good conditions?' Then the companies will realise that people care."

People

In 2007, Primark's chairman and managing director was Arthur Ryan who lives in Ireland at Lansdowne Road (which is known as 'millionaires’ row') and who is a friend of Sir Philip Green Breege O’Donoghue is non executive director of C and C Group

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